ForexLive Asia-Pacific FX news wrap: China December CPI the lowest since April

• China inflation subdued despite fiscal stimulus. Structural & consumer sentiment challenge
• HSBC upgraded Hong Kong stock outlook to Overweight, raised its Hang Seng year-end target
• JPY remains supported after Japan base salaries saw their largest increase in 32 years
• China December CPI +0.1% y/y (expected +0.1%, prior +0.2%)
• US dockworkers reach deal to avert port strike
• PBOC sets USD/ CNY reference rate for today at 7.1886 (vs. estimate at 7.3159)
• Trump says China is running the Panama Canal, that’s not going to happen either
• Australian Nov 2024 trade data: Exports +4.8% m/m (prior +3.6%) imports +1.7% (prior +0.1%
• Australian retail sales, November 2024: +0.8% m/m (vs. expected +1.0%, prior +0.6%)
• UK data – BRC Shop Price Index for December: -1.0% y/y (expected –0.4%, prior –0.6%)
• Japanese yen gains momentum (just a bit!) as base wage growth hits 32-Year High
• January 9 US holiday: NYSE, NASDAQ closed. CME hours impacted also. Bonds half day.
• Japan wages data: Inflation adjusted real wages -0.3% y/y
• ECB’s Cipollone says monetary policy should let Euro zone economy run at potential
• Are US bonds being driven by an “insanity premium”?
• The two stark scenarios for the US in 2025: 1. Inflation and rate hikes, or 2. Recession
• ICYMI – South Korea is reportedly planning to allow institutional trading of crypto
• UBS expect further Federal Reserve interest rate cuts from the June meeting
• Forexlive Americas FX news wrap: Initial jobless claims drop, USD stays strong
• JP Morgan: US dollar has defied gravity…and could continue doing so
• Mixed gains/losses in the major indices
• Trade ideas thread – Thursday, 9 January, insightful charts, technical analysis, ideas

USD/JPY
is back under 158. We had wages data from Japan today boosting the
yen, with base salaries seeing their largest increase in 32 years.
This keeps the prospects of Bank of Japan rate hikes alive in the
near term. The bank next meet on January 23 and 24 and a hike is not
a lock by any means, but the data today supporting the view of a
cycle of solid wage growth and inflation has increased the chance. I
should note, wages declined in inflation-adjusted terms.

The
main data of focus for the session was inflation, CPI and PPI, from
China for December. CPI fell to its slowest since April.
Core inflation rose to its highest in 5 months, so perhaps we’ll
see some headline rises at a faster pace to come. The PPI remains in
deflation, for the 27th
month in a row. Chinese equities are not a lot changed as I post,
with the Shanghai Composite down around 0.25% and Hong Kong’s Hang
Seng up a similar amount.

Also
on the data agenda today were Australian
retail sales. These
rose
by 0.8% (expected
+1%)
in November – the most in 10 months – from October, when they
increased by a revised 0.5%. AUD/USD
dipped a few tics on the data but there has been no follow through.

No sooner do I post “USD/JPY is back under 158” than it pops up and makes a liar out of me by .004 😉

***

In non-market news the wildfires in California are continuing. A mandatory evacuation has been order for Hollywood according to the latest I’ve seen. US President Joe Biden has approved California’s Major Disaster Declaration, and ordered Federal Assistance to aid in the State’s Wildfire Response.

This article was written by Eamonn Sheridan at www.forexlive.com.